Central Valley multifamily Class A fundamentals strengthen in 2026

Central Valley multifamily market overview

The Central Valley multifamily market entered 2026 with some lingering pressure from last year’s elevated deliveries, though the impact of new supply has been uneven across the region. The average vacancy rate has risen by 40 basis points in the past year, pushed higher by increases in San Joaquin and Stanislaus counties. While completions in the first quarter were limited, new projects continued to break ground and the number of units under construction is up 19% compared to one year ago. Most of the future development activity is concentrated in Bakersfield rather than spread across the market. Despite an increase in new inventory, Class A properties have generally outperformed the rest of the market in recent periods. Class A vacancy has tightened by 40 basis points year over year, while the rate has trended higher in Class C units in response to net move-outs.

After surging at the end of last year, multifamily investment activity in the Central Valley returned closer to long-term average levels during the first quarter. A handful of transactions totaling nearly $26 million closed in the first few months of the year, with all sales involving older Class B or Class C assets in Merced and Stanislaus counties. The sales mix kept per-unit pricing below the region’s historical levels. During the past 12 months, sales volumes averaged closer to $100 million per quarter, led by Fresno’s deeper transaction base and stronger pricing in San Joaquin County. Buyers continue to favor smaller, stabilized assets where basis and financing risk are easier to manage, while the lack of larger Class A trades continues to limit price discovery at the top of the market.

Looking ahead for Central Valley’s multifamily market:

The 2026 outlook is driven less by a change in demand than by a narrower supply burden. The market absorbed roughly 1,800 units in 2025 without a material break in occupancy or rents, and the remaining pipeline is no longer a broad regional headwind. Most near-term construction risk is concentrated in Bakersfield, while San Joaquin, Stanislaus, Fresno, and Tulare counties face a lighter competitive set than in the prior year. That shift should reduce concession pressure and give stabilized properties more control over renewals and rent pricing. Positive but below-average job growth should be enough to support continued absorption, though not enough to produce a sharp acceleration in rent growth.

Sales activity is expected to continue rebuilding in 2026. The trailing 12-month median price holding flat against 2024 suggests values have stabilized for assets that can clear the market, though first-quarter activity shows liquidity is still concentrated in smaller, older properties where basis and financing risk are easier to underwrite. Fresno and San Joaquin counties are expected to remain attractive to a majority of buyers, with Fresno offering transaction depth and San Joaquin maintaining the region’s pricing premium. Larger and newer assets may take longer to trade, leaving most near-term activity concentrated in private-capital deals.

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